High Court of Ireland Decisions

1. Article 33.1 of the Constitution provides that there shall be a Comptroller and Auditor General to control on behalf of the State all disbursements and to audit all accounts of monies administered by or under the authority of the Oireachtas. Article 33.4 provides that the Comptroller and Auditor General shall report to Dail Eireann at stated periods as determined by law.

2. Prior to the enactment of the Constitution, Article 62 of the Constitution of Saorstat Eireann had provided that Dail Eireann should appoint a Comptroller and Auditor General to act on behalf of Saorstat Eireann who should control all disbursements and should audit all accounts of monies administered by or under the authority of the Oireachtas and report to Dail Eireann at stated periods to be determined by law. The Comptroller and Auditor General Act, 1923 (the 1923 Act) provided for the mode of appointment and terms and conditions of appointment of the Comptroller and Auditor General and Section 7(3) provided that the Comptroller and Auditor General should have and exercise, inter alia, the powers and duties conferred and imposed by the Exchequer and Audit Departments Acts, 1866 and 1921, as adapted.

3. Section 2 of the Exchequer and Audit Departments Act, 1921 (the 1921 Act) dealt specifically with the examination of accounts of receipts of revenue by the Comptroller and Auditor General and provided as follows:-

4. Section 2 of the 1921 Act was the statutory provision which governed the audit by the Plaintiff, who is the Comptroller and Auditor General under Article 33, of the revenue account of the Revenue Commissioners for the financial year ended 31st December, 1993, which is in issue in these proceedings.

5. In respect of financial years beginning on or after 1st January, 1994, Section 2 of the 1921 has been replaced by Section 3(7) of the Comptroller and Auditor General (Amendment) Act, 1993 (the 1993 Act), which provides as follows:-

6. As regards the issues which arise for determination in these proceedings and the implication of Section 2 of the 1921 Act and Section 3(7) of the 1993 Act in such determination, in my view, there is no substantial difference between the two provisions.

7. In 1993, a scheme which has come to be known colloquially as "the tax amnesty" was introduced and given effect to in the Waiver of Certain Tax, Interest and Penalties Act, 1993 (the Amnesty Act). There were two elements involved in the amnesty - the schemes which have become known colloquially as "the incentive amnesty" and "the general amnesty". It is the implementation of the incentive amnesty in the financial year ended 31st December, 1993 which has given rise to the issues in these proceedings.

8. Section 2 of the Amnesty Act identified the taxes to which the incentive amnesty applied - primarily, income tax and capital gains tax. Section 2 also identified the persons eligible to avail of the incentive amnesty, namely, individuals who owed tax on declared or undeclared income or gains in respect of any period ending on or before 5th April, 1991, but there was a proviso to Section 2(2) which, in broad terms, excluded from the scope of the incentive amnesty the following persons and taxes:

9. In effect, that proviso imposed certain eligibility pre-conditions to participation in the incentive amnesty.

10. The inducement to participate in the incentive amnesty was threefold. First, tax at a concessionary rate of 15% was accepted in satisfaction of outstanding tax. Secondly, any interest due on the outstanding tax was waived and penalties forgiven. Thirdly, the incentive amnesty was to be administered by a special collection unit staffed by the Chief Special Collector and special collectors who were bound by a declaration of confidentiality so as to ensure confidentiality and anonymity for the participating taxpayers.

11. The incentive amnesty operated on a self-assessment basis. A participating individual was required to give to the Chief Special Collector by 30th November, 1993 a full and true declaration of all income and chargeable gains in respect of which tax was unpaid embodying a statement that the declared amounts did not arise from or by reason of an unlawful source or activity. He was further required, either contemporaneously with the signing of the declaration or, in any event, not later than 14th January, 1994, to remit to the Chief Special Collector an amount equal to 15% of the declared amounts. By Section 2(4) the Special Collector was required to issue to each participating individual two documents: a certificate setting out his name and address, the settlement amount paid by him and the respective amounts of the declared amounts; and evidence that such a certificate had been given.

12. The provisions designed to guarantee confidentiality were contained in Section 7 of the Amnesty Act which provided that special collection functions might only be discharged by special collectors. The administrative tasks involved in special collection functions were -

13. By subsection (2) each special collector was required to make and subscribe a declaration of confidentiality in which he undertook not to disclose to a person who was not a special collector any information he would acquire, or have access to, in the course of discharging special collection functions save where the disclosure of such information was deemed by virtue of the proviso to subsection (4) not to be a contravention of the declaration. Subsection (4) provided that a special collector should be deemed to have contravened his declaration of confidentiality if he should disclose, or cause to be disclosed, to any person who was not a special collector "any information which he could have acquired, or had access to, only by virtue of being a special collector". The proviso to subsection (4) stipulated that a special collector should not be deemed to have contravened his declaration of confidentiality where -

14. Subsection (5) of Section 7 complemented paragraph (c) of the proviso quoted above and provided as follows:-

15. The central issue in these proceedings in the proper construction of subsection (5) of Section 7.

16. In order to fully outline the legislative scheme of the incentive amnesty, it is necessary to refer briefly to Sections 4, 5 and 6 of the Amnesty Act. Section 4 provided that the benefits accruing to a person who participated in the incentive amnesty would be withdrawn ex post facto by the waiver of interest and penalties being cancelled and the settlement amount being treated as a payment on account of tax due in the circumstances outlined in that section, for example, in the case of an individual who failed to deliver a return of income for the year of assessment 1992/1993 by 31st January, 1994, or where a declaration submitted to the Chief Special Collector in accordance with Section 2 did not contain a full and true statement of income and chargeable gains. Section 5 was designed to preclude any inquiry or action by an inspector or other officer of the Revenue Commissioners in relation to liability to tax for a period in respect of which an individual participated in the incentive amnesty. If an individual produced a certificate issued by the Chief Special Collector under Section 2(4) and that certificate was validated by the Chief Special Collector, the inspector or other officer was precluded from continuing with his inquiry or action unless, on application by the inspector or other officer to the Appeal Commissioners, the Appeal Commissioners were satisfied that there were reasonable grounds to suggest that the declaration made by the individual to the Chief Special Collector under Section 2 did not contain a full and true statement of income and chargeable gains as required by Section 2. Section 6 provided a mechanism whereby demands or other requests for payment by the Collector General would be withdrawn on production by an individual, who participated in the incentive amnesty, of evidence issued by the Special Collector under Section 2 of the issue of a certificate under that Section.

17. In the first half of 1994, the Plaintiff, as part of his audit of the revenue account of the Revenue Commissioners for the year ended 31st December, 1993, carried out an examination of the administrative procedures followed in the office of the Chief Special Collector for the receipt of declarations, the recording and the lodgment of amounts received and the subsequent issue of certificates to declarants under the Amnesty Act. In his report to Dail Eireann for that year, the Plaintiff reported that he was generally satisfied with the manner in which the special collection functions were carried out. In addition, the Plaintiff sought to use information acquired in the course of the examination in the office of the Chief Special Collector to assess if the outcome of the incentive amnesty was in any way indicative of a lack of effectiveness in the Revenue Commissioners' procedures for the assessment and collection of tax generally. Using a random number generator, he took sample of 200 participants in the incentive amnesty and endeavoured to find a match for each in the data in relation to tax payers in the Revenue Commissioners' central computer. If a taxpayer match was identified and there were reasonable grounds for supposing that the participant was one and the same person as the tax payer, the information contained in the file maintained by the Chief Special Collector was compared with the data in the central computer with a view to establishing whether -

18. In his report to Dail Eireann, the Plaintiff reported that, while always being conscious of the need to be particularly careful not to make any reference which might in any way identify any person availing of the incentive amnesty or to disclose individual amounts paid, he had intended to report in general terms on the results of that exercise insofar as those results gave an insight into the issues with which he was concerned.

19. However, the Plaintiff did not so report because there was a difference of opinion between the Revenue Commissioners and the Chief Special Collector, on the one hand, and the Plaintiff, on the other hand, as to whether, as was contended by the former, by virtue of paragraph (c) of the proviso to Section 7(4) and Section 7(5) of the Amnesty Act the Plaintiff was restricted to an audit of the discharge of the special collections functions or whether, as was contended by the Plaintiff, by virtue of the proviso to Section 7(5) the Plaintiff was entitled to exercise any function conferred on him by law, for example, to carry out a systems audit of the Revenue Commissioners' procedures for assessment, collection and bringing to account of revenue generally and a regularity audit of the transactions arising from the incentive amnesty using information gleaned from his audit of the special collections function and matching it with other data in the possession of the Revenue Commissioners. In order to resolve this difference of opinion, these proceedings have been instituted to obtain the determination of this Court on the questions raised by Section 7 of the Amnesty Act. The Plaintiff acknowledges that the matching exercise is outside the scope of ensuring that a special collection function has been discharged in accordinace with the Amnesty Act. However, it is common case that, but for the existence of Section 7(5) of the Amnesty Act, the Plaintiff would have power to carry out such exercise by virtue of Section 2 of the 1921 Act.

20. Two issues are raised on the pleadings, namely:

21. On the issue of the proper construction of Section 7(5) it was submitted on behalf of the Plaintiff that the overall legislative intention manifested by Section 7 is to provide confidentiality to those availing of the incentive amnesty while, at the same time, permitting the Plaintiff to carry out his functions under the Constitution and statute law. A literal interpretation of the proviso to Section 7(5), it was submitted, indicates that the intention of the legislature was to limit the effect of the restriction on use stipulated in the segment of Section 7(5) preceding the proviso so as to permit the Plaintiff to use information acquired from a special collector for purposes other than the sole purpose stipulated in the segment preceding the proviso. Particular emphasis was laid on the definition of "function" in Section 1 of the Amnesty Act, wherein it is defined as including "powers and duties", the use of the word "functions" in the plural in the proviso and the use of the word "including" in the proviso, which, it was submitted, indicated that the legislature contemplated the Plaintiff exercising a function or functions over and above the Plaintiff's duty to report to Dail Eireann.

22. Shorn of the segment at the end commencing with the words "Provided that", Section 7(5) is open to only one interpretation - that information acquired by the Plaintiff from a special collector may be used by him for the purpose of ensuring that any special collection function has been discharged in accordance with the Amnesty Act and for no other purpose, which, in my view, manifests an intention that the Plaintiff may use such information only for the purpose of a "self-contained" audit of the functions carried out by the special collectors. In support of the contention that the segment of Section 7(5) commencing with the words "Provided that" attenuated the restriction expressed in the previous words, it was submitted on behalf of the Plaintiff that the segment commencing with the words "Provided that" as a drafting device is to be categorised as a "proviso" in the sense explained in the following passage from Benion on Statutory Interpretation , Second Edition, at Section 242:

23. The intention of the legislature, it was argued, in enacting the segment of Section 7(5) commencing with the words " Provided that" was to narrow the effect of the restriction on the purpose for which information obtained from a special collector might be used by the Plaintiff imposed by the preceding words and to narrow such effect to the extent that the purpose for which the Plaintiff might use such information was broadened out to encompass all of the Plaintiff's constitutional and statutory powers and duties.

24. If the segment commencing with the words "Provided that" has the effect contended for by the Plaintiff, certain consequences ensue. First, as regards the Plaintiff, the preceding words, which are clear and unambiguous, are rendered totally meaningless. Such a consequence can hardly have been intended by the legislature. Indeed, as was pointed out by O'Flaherty J. in Cork County Council v. Whillock (1993) 1 I.R. 231 at p. 237, a construction which would leave without effect any part of the language of a statute will normally be rejected. Secondly, if the Plaintiff is entitled to use information obtained from a special collector in a manner in which the Accounting Officer of the Revenue Commissioners is precluded from using it and to report to Dail Eireann on the results of such use, the Accounting Officer may be put in a position in which he is unable to deal with audit queries raised by the Plaintiff or to comment meaningfully on the Plaintiff's report to Dail Eireann or to deal with queries raised by the Public Accounts Committee of Dail Eireann. This runs counter to the legislative intention apparent in paragraph (c) of the proviso to subsection (4) and the preceding segment of subsection (5) of Section 7, which put the Accounting Officer and the Plaintiff on an equal footing in relation to acquiring information from a special collector and the use to which that information may be put. Thirdly, information provided by a special collector in response to a request from the Plaintiff under paragraph (c) of the proviso to subsection (4) in a manner so as not to contravene his declaration of confidentiality, that is to say, solely for the purpose stipulated in paragraph (c), may be capable of being used in a manner which, had it been provided for use in such manner, would constitute a breach of the special collector's duty of confidentiality. It can hardly have been intended by the legislature that the obvious schematic nexus between paragraph (c) of the proviso, which deals with the provision of information, and subsection (5), which deals with the manner in which the information provided may be used, could be obliterated in this way. Fourthly, while acknowledging the Plaintiff's avowed intention of not infringing the guarantee of anonymity inherent in the confidentiality provisions contained in Section 7, the logical extension of the proposition advanced by the Plaintiff is that, as a matter of principle, he is entitled to report on his examination of the office of the Chief Special Collector within the ambit of the powers and duties conferred and imposed on him by law, notwithstanding that such guarantee of anonymity may be infringed.

25. In my view, it cannot have been the intention of the legislature that the segment of subsection (5) commencing with the words "Provided that" would have a meaning which would give rise to any of the foregoing consequences. I consider that the correct categorisation of that segment is that it constitutes a "saving" in the sense explained in the following passage from Benion, op. cit. in Section 243:

26. That explanation is amplified in the succeeding commentary which is in the following terms:-

27. In my view, reading the Amnesty Act as a whole, the intention of the legislature in adding the segment commencing with the words "Provided that" to subsection (5) was to remove any doubts which might arise as to whether the Plaintiff was entitled to exercise all his existing powers and duties in carrying out the audit of the special collector's functions to which the preceding words limit him but within the constraints of the "self-containment" imposed by the preceding words. For example, in relation to the audit for the year ended 31st December, 1993, in my view, the saving proviso preserved the duty of the Plaintiff to carry out a systems audit within the office of the Chief Special Collector in accordance with Section 2(1) of the 1921 Act and his duty to satisfy himself as to the correctness of the sums brought to account in respect of the revenue arising from the incentive amnesty in accordance with Section 2(2) of the 1921 Act and also his duty to report to Dail Eireann. On this construction, both the purview of Section 7(5) and the saving proviso are meaningful, even if the saving proviso reflects what I believe to be an abundance of caution on the part of the draftsman. The inconsistencies which the construction advanced by the Plaintiff give rise to - the inconsistency between paragraph (c) of the proviso to subsection (4) and subsection (5) and the differing functions of the Accounting Officer and the Plaintiff - are avoided. Moreover, the hermetic seal of confidentiality and anonymity, which the provisions of subsections (1) to (4) inclusive of Section 7 put in place, is preserved intact unless breached at the instigation of a participant in the incentive amnesty who relies on a certificate issued by a special collector or evidence issued under Section 2 in response to action taken against him under Section 5 or Section 6.

28. The Plaintiff's challenge to the constitutional validity of Section 7(5) is founded on the proposition that the restriction on the manner in which he is entitled to use information acquired by him from the special collectors contained in that subsection is impermissible having regard to his function under Article 33 of the Constitution to audit all accounts of monies administered by or under the authority of the Oireachtas and to report to Dail Eireann. In assessing whether this proposition is well founded, it is necessary to ascertain the extent of his function under the Constitution to audit revenue. It was submitted on behalf of the Plaintiff that in construing the term "audit" as used in Article 33.1 regard should be had to the legal position of the then Comptroller and Auditor General when the Constitution was enacted in 1937 and in support of this submission the Plaintiff relies upon Attorney General v. Hamilton (No. 1) 1993 2 I.R. 250 and the earlier cases referred to in Kelly on The Irish Constitution , Third Edition, at p. cix et seq. It follows, it was submitted, that the audit function of the Plaintiff in relation to the revenue side under Article 33 is to be construed by reference to the definition of the then existing audit function in relation to the revenue side by Section 7 of the 1923 Act and by Section 2 of the 1921 Act. Further, it was submitted, the two basic elements in the audit of central government which are relevant in the context of the issues in these proceedings are a financial audit, which involves a systems check or audit, and a regularity audit to establish compliance with authority. The evidence adduced on behalf of the Plaintiff supported this submission.

29. When the Constitution was enacted it had been the duty of the Comptroller and Auditor General to examine accounts of receipts of revenue in the manner prescribed in Section 2 of the 1921 Act for sixteen years. In mandating the Plaintiff "to audit all accounts of monies" the framers of the 1937 Constitution can hardly have intended that his audit function in relation to the revenue side should be at variance with established practice and should be limited to merely ensuring, to use the language of Section 36 of the Exchequer and Audit Departments Act, 1866, that the person rendering account is "even and quit". In my view, the audit function of the Plaintiff under Article 33 in relation to the revenue accounts of the Revenue Commissioners, in addition to requiring him to carry out a financial audit in the sense of establishing that proper books of accounts and records are being maintained and that the accounts, which are in agreement with them, give a true and fair view of the transactions in the relevant accounting period and the state of affairs at the end of that period, requires him to carry out a systems audit to check the effectiveness of the procedures operated generally by the Revenue Commissioners for the assessment and collection of taxes and to carry out a regularity audit for the purposes of establishing that the underlying transactions comply with authority with a view to satisfying himself as to the correctness of the sums brought to account.

30. In precluding the Plaintiff from using information acquired from the special collectors for the purpose of a matching exercise of the type carried out in 1994 and reporting his conclusions thereon, the Plaintiff contends that Section 7(5) is repugnant to Article 33 and invalid in that it constitutes a limitation on his audit functions and, in particular, his duty to carry out a systems audit to check the effectiveness of the procedures operated generally by the Revenue Commissioners and his duty to carry out a regularity audit to establish the entitlement of participating taxpayers to participate in the incentive amnesty. In my view, in the framework of the legislative scheme by which the incentive amnesty was established, the effect of Section 7(5) is not to constitute such a limitation.

31. The policy underlying the incentive amnesty is easily discernible. It was to get in outstanding revenue and to bring non-compliant taxpayers into the tax net. The guarantee of confidentiality to participating taxpayers was the linch-pin of the legislative scheme devised to implement that policy.

32. Implementation of the incentive amnesty and the enactment of Section 7(5) did not in any way diminish the power or ability of the Plaintiff to check the effectiveness of the procedures operated by the Revenue Commissioners generally. His powers during the year ended 31st December, 1993 were no less than his powers during preceding accounting periods. The effect of Section 7(5) was to preclude the Plaintiff from enhancing his ability to check the effectiveness of the Revenue Commissioners' procedures by using information which, in accordance with the legislative scheme of the incentive amnesty enacted by the Oireachtas, was made available on the basis that it would not be so used. The enactment of such a legislative scheme, in my view, did not constitute a limitation of the Plaintiff's audit function under Article 33.

33. The Plaintiff's contention that a regularity audit of the revenue accounts of the Revenue Commissioners involves verifying a taxpayer's entitlement to avail of the incentive amnesty is misconceived. The authority of the special collectors to receive declarations and remittances and to issue certificates and evidence of issue under the incentive amnesty is Section 2 of the Amnesty Act, which is based on self-assessment. The use of information acquired by the Plaintiff from special collectors permitted by Section 7(5) enables him to establish compliance with authority. While the benefits accruing from the incentive amnesty are withdrawn if a participating taxpayer does not comply with the prescribed eligibility conditions, under the legislative scheme of the incentive amnesty no statutory obligation or ability to verify compliance with such conditions arises until the taxpayer relies on a certificate or evidence issued by a special collector in response to an action under Section 5 or Section 6 of the Amnesty Act. Enactment of such a legislative scheme, in my view, is not a limitation on the Plaintiff's audit function under Article 33.

34. Accordingly, Section 7(5) is not invalid having regard to the provisions of Article 33 of the Constitution.